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Illinois Law Firm Pays $27.5 Million for Age Discrimination

January 23rd, 2008 Posted by Amelia

An international law firm recently settled an EEOC suit for age discrimination by paying $27.5 million to 31 former partners. The law firm of Sidley, Austin, Brown and Wood denies EEOC allegations that law partners were forced out of the partnership due to their age, but the settlement has been approved by a federal judge.

The payment will be divided amongst the 32 claimants, many former partners who were forced out under a 1999 reorganization. Included in those claimants are also partners who have been forced out since Sidley, Austin’s implementation of a mandatory retirement policy in 1978.

Under the terms of the settlement, the average payout for each employee is just under $860,000. The highest payment to any one former partner is $1,835,510.

In 2005, the EEOC brought suit against Sidley, Austin under the federal Age Discrimination in Employment Act or ADEA. The ADEA prohibits discrimination based on age against workers who are over the age of 40. The ADEA or Age Discrimination in Employment Act of 1967 applies to employers with 20 or more employees and prohibits making employment decisions based on age, including hiring, termination, promotions, training, salary and benefits.

Sidley, Austin, Brown & Wood launched a creative defense in the case, as one might expect from a law firm. While Sidley, Austin did not deny forcing the partners out, it argued that partners in a law firm are not “employees” under the ADEA. That argument has been overturned, and as part of the agreement the firm agrees that “each person for whom EEOC has sought relief in this matter was an employee with the meaning of the ADEA.”

The settlement also includes an injunction that bars Sidley, Austin from terminating, expelling, retiring, or reducing the compensation of partners, or changing their partnership status due to age. The firm is also prohibited from creating or perpetuating any informal or formal policy requiring that partners retire once they reach a certain age. Any policy requiring that the remaining partners give permission for a partner to continue to practice once he or she reaches a certain age, is also prohibited.

“This case has been closely followed by the legal community as well as by professional services providers generally,” Says Ronald S. Cooper, general counsel of the EEOC. “It shows that EEOC will not shrink from pursuing meritorious claims of employment discrimination wherever they are found. Neither the relative status of the protected group members not the resources and sophistication of the employer were dispositive here.”

This landmark case determined that except for a very few managing partners at the top, most “partners” at Sidley, Austin appeared to be ordinary employees “not unlike their colleagues at parallel levels in the business community” argued the EEOC. Therefore, the partners were covered by the ADEA.

A major issue was the fact that the firm’s attorneys had no voice in the control of the firm, and could be fired without notice, or without the consent of their fellow attorneys, just like any other employee.

According to the firm’s website, Sidley, Austin, Brown & Wood, based in Chicago, has 1,800 attorneys on three continents with offices in Dallas, Los Angeles, New York, San Francisco, Washington, D.C., Beijing, Brussels, Geneva, Hong Kong, London, Shanghai, Singapore and Tokyo.

In addition to enforcing the ADEA, the Equal Employment Opportunity Commission or EEOC also enforces a number of other laws protecting workers from discrimination. This includes Title VII of the Civil Rights Act of 1964 which prohibits discrimination in employment based on race, color, religion, sex or national origin. The law also protects employees who file complaints about discrimination from retaliation. The EEOC also enforces the Equal Pay Act of 1963, which prohibits gender-based wage discrimination. In addition, the EEOC enforces the Rehabilitation Act of 1973, which prohibits employment discrimination against people with disabilities in the federal sector and the ADA, or Americans with Disabilities Act, which prohibits discrimination against people with disabilities in the private sector.